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TITLE I--TEACHING HOSPITALS

SEC. 101. TERMINATION OF MULTIYEAR REDUCTION OF INDIRECT GRADUATE MEDICAL EDUCATION PAYMENTS.

Section 1886(d)(5)(B)(ii) (42 U.S.C. 1395ww(d)(5)(B)(ii)) is amended--

(1) by adding `and' at the end of subclause (II); and

(2) by striking subclauses (III), (IV), and (V) and inserting the following:

`(III) on or after October 1, 1998, `c' is equal to 1.6.'.

SEC. 102. PROGRAM OF PAYMENTS TO CHILDREN'S HOSPITALS THAT OPERATE GRADUATE MEDICAL EDUCATION PROGRAMS.

(a) PAYMENTS- The Secretary shall make two payments under this section to each children's hospital for each of fiscal years 2000 and 2001, one for the direct expenses and the other for indirect expenses associated with operating approved graduate medical residency training programs.

(b) AMOUNT OF PAYMENTS-

(1) IN GENERAL- Subject to paragraph (2), the amounts payable under this section to a children's hospital for an approved graduate medical

residency training program for a fiscal year are each of the following amounts:

(A) DIRECT EXPENSE AMOUNT- The amount determined under subsection (c) for direct expenses associated with operating approved graduate medical residency training programs.

(B) INDIRECT EXPENSE AMOUNT- The amount determined under subsection (d) for indirect expenses associated with the treatment of more severely ill patients and the additional costs relating to teaching residents in such programs.

(2) CAPPED AMOUNT-

(A) IN GENERAL- The total of the payments made to children's hospitals under paragraph (1)(A) or paragraph (1)(B) in a fiscal year shall not exceed the funds appropriated under paragraph (1) or (2), respectively, of subsection (f) for such payments for that fiscal year.

(B) PRO RATA REDUCTIONS OF PAYMENTS FOR DIRECT EXPENSES- If the Secretary determines that the amount of funds appropriated under subsection (f)(1) for a fiscal year is insufficient to provide the total amount of payments otherwise due for such periods under paragraph (1)(A), the Secretary shall reduce the amounts so payable on a pro rata basis to reflect such shortfall.

(c) AMOUNT OF PAYMENT FOR DIRECT GRADUATE MEDICAL EDUCATION -

(1) IN GENERAL- The amount determined under this subsection for payments to a children's hospital for direct graduate expenses relating to approved graduate medical residency training programs for a fiscal year is equal to the product of--

(A) the updated per resident amount for direct graduate medical education , as determined under paragraph (2)); and

(B) the average number of full-time equivalent residents in the hospital's graduate approved medical residency training programs (as determined under section 1886(h)(4) of the Social Security Act (42 U.S.C. 1395ww(h)(4))) during the fiscal year.

(2) UPDATED PER RESIDENT AMOUNT FOR DIRECT GRADUATE MEDICAL EDUCATION - The updated per resident amount for direct graduate medical education for a hospital for a fiscal year is an amount determined as follows:

(A) DETERMINATION OF HOSPITAL SINGLE PER RESIDENT AMOUNT- The Secretary shall compute for each hospital operating an approved graduate medical education program (regardless of whether or not it is a children's hospital) a single per resident amount equal to the average (weighted by number of full-time equivalent residents) of the primary care per resident amount and the non-primary care per resident amount computed under section 1886(h)(2) of the Social Security Act for cost reporting periods ending during fiscal year 1997.

(B) DETERMINATION OF WAGE AND NON-WAGE-RELATED PROPORTION OF THE SINGLE PER RESIDENT AMOUNT- The Secretary shall estimate the average proportion of the single per resident amounts computed under subparagraph (A) that is attributable to wages and wage-related costs.

(C) STANDARDIZING PER RESIDENT AMOUNTS- The Secretary shall establish a standardized per resident amount for each such hospital--

(i) by dividing the single per resident amount computed under subparagraph (A) into a wage-related portion and a non-wage-related portion by applying the proportion determined under subparagraph (B);

(ii) by dividing the wage-related portion by the factor applied under section 1886(d)(3)(E) of the Social Security Act (42 U.S.C. 1395ww(d)(3)(E)) for discharges occurring during fiscal year 1999 for the hospital's area; and

(iii) by adding the non-wage-related portion to the amount computed under clause (ii).

(D) DETERMINATION OF NATIONAL AVERAGE- The Secretary shall compute a national average per resident amount equal to the average of the standardized per resident amounts computed under subparagraph (C) for such hospitals, with the amount for each hospital weighted by the average number of full-time equivalent residents at such hospital.

(E) APPLICATION TO INDIVIDUAL HOSPITALS- The Secretary shall compute for each such hospital that is a children's hospital a per resident amount--

(i) by dividing the national average per resident amount computed under subparagraph (D) into a wage-related portion and a non-wage-related portion by applying the proportion determined under subparagraph (B);

(ii) by multiplying the wage-related portion by the factor described in subparagraph (C)(ii) for the hospital's area; and

(iii) by adding the non-wage-related portion to the amount computed under clause (ii).

(F) UPDATING RATE- The Secretary shall update such per resident amount for each such children's hospital by the estimated percentage increase in the consumer price index for all urban consumers during the period beginning October 1997 and ending with the midpoint of the hospital's cost reporting period that begins during fiscal year 2000.

(d) AMOUNT OF PAYMENT FOR INDIRECT MEDICAL EDUCATION -

(1) IN GENERAL- The amount determined under this subsection for payments to a children's hospital for indirect expenses associated with the treatment of more severely ill patients and the additional costs related to the teaching of residents for a fiscal year is equal to an amount determined appropriate by the Secretary.

(2) FACTORS- In determining the amount under paragraph (1), the Secretary shall--

(A) take into account variations in case mix among children's hospitals and the number of full-time equivalent residents in the hospitals' approved graduate medical residency training programs; and

(B) assure that the aggregate of the payments for indirect expenses associated with the treatment of more severely ill patients and the additional costs related to the teaching of residents under this section in a fiscal year are equal to the amount appropriated for such expenses for the fiscal year involved under subsection (f)(2).

(e) MAKING OF PAYMENTS-

(1) INTERIM PAYMENTS- The Secretary shall determine, before the beginning of each fiscal year involved for which payments may be made for a hospital under this section, the amounts of the payments for direct graduate medical education and indirect medical education for such fiscal year and shall (subject to paragraph (2)) make the payments of such amounts in 26 equal interim installments during such period.

(2) WITHHOLDING- The Secretary shall withhold up to 25 percent from each interim installment for direct graduate medical education paid under paragraph (1).

(3) RECONCILIATION- At the end of each fiscal year for which payments may be made under this section, the hospital shall submit to the Secretary such information as the Secretary determines to be necessary to determine the percent (if any) of the total amount withheld under paragraph (2) that is due under this section for the hospital for the fiscal year. Based on such determination, the Secretary shall recoup any overpayments made, or pay any balance due. The amount so determined shall be considered a final intermediary determination for purposes of applying section 1878 of the Social Security Act (42 U.S.C. 1395oo) and shall be subject to review under that section in the same manner as the amount of payment under section 1886(d) of such Act (42 U.S.C. 1395ww(d)) is subject to review under such section.

(f) AUTHORIZATION OF APPROPRIATIONS-

(1) DIRECT GRADUATE MEDICAL EDUCATION -

(A) IN GENERAL- There are hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, for payments under subsection (b)(1)(A)--

(i) for fiscal year 2000, $90,000,000; and

(ii) for fiscal year 2001, $95,000,000.

(B) CARRYOVER OF EXCESS- The amounts appropriated under subparagraph (A) for fiscal year 2000 shall remain available for obligation through the end of fiscal year 2001.

(2) INDIRECT MEDICAL EDUCATION - There are hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, for payments under subsection (b)(1)(A)--

(A) for fiscal year 2000, $190,000,000; and

(B) for fiscal year 2001, $190,000,000.

(f) RELATION TO MEDICARE AND MEDICAID PAYMENTS- Notwithstanding any other provision of law, payments under this section to a hospital for fiscal years 2000 and 2001--

(1) are in lieu of any amounts otherwise payable to the hospital under section 1886(h) or 1886(d)(5)(B) of the Social Security Act (42 U.S.C. 1395ww(h); 1395ww(d)(5)B)) for portions of cost reporting periods occurring during such fiscal years; but

(2) shall not affect the amounts otherwise payable to such hospitals under a State medicaid plan under title XIX of such Act (42 U.S.C. 1396 et seq.).

(g) DEFINITIONS- In this section:

(1) APPROVED GRADUATE MEDICAL RESIDENCY TRAINING PROGRAM- The term `approved graduate medical residency training program' has the meaning given the term `approved medical residency training program' in section 1886(h)(5)(A) of the Social Security Act (42 U.S.C. 1395ww(h)(5)(A)).

(2) CHILDREN'S HOSPITAL- The term `children's hospital' means a hospital described in section 1886(d)(1)(B)(iii) of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)(iii)).

(3) DIRECT GRADUATE MEDICAL EDUCATION COSTS- The term `direct graduate medical education costs' has the meaning given such term in section 1886(h)(5)(C) of the Social Security Act (42 U.S.C. 1395ww(h)(5)(C)).

(4) SECRETARY- The term `Secretary' means the Secretary of Health and Human Services.

SEC. 103. EXCLUSION OF NURSING AND ALLIED HEALTH EDUCATION COSTS IN CALCULATING MEDICARE+CHOICE PAYMENT RATE.

(a) EXCLUDING COSTS IN CALCULATING PAYMENT RATE-

(1) IN GENERAL- Section 1853(c)(3)(C)(i) (42 U.S.C. 1395w-23(c)(3)(C)(i)) is amended--

(A) by striking `and' at the end of subclause (I);

(B) by striking the period at the end of subclause (II) and inserting `, and'; and

(C) by adding at the end the following:

`(III) for costs attributable to approved nursing and allied health education programs under section 1861(v).'.

(2) EFFECTIVE DATE- The amendments made by paragraph (1) apply in determining the annual per capita rate of payment for years beginning with 2001.

(b) PAYMENT TO HOSPITALS OF NURSING AND ALLIED HEALTH EDUCATION PROGRAM COSTS FOR MEDICARE+CHOICE ENROLLEES- Section 1861(v)(1) of such Act (42 U.S.C. 1395x(v)(1)) is amended by adding at the end the following:

`(V) In determining the amount of payment to a hospital for cost reporting periods (or portions thereof) occurring on or after January 1, 2001, with respect to the reasonable costs for approved nursing and allied health education programs, individuals who are enrolled with a Medicare+Choice organization under part C shall be treated as if they were not so enrolled.'.

TITLE II--RURAL HOSPITALS

SEC. 201. REVISION OF CRITERIA FOR DESIGNATION AS A CRITICAL ACCESS HOSPITAL.

(a) CONVERSION OF DOWNSIZED OR RECENTLY CLOSED HOSPITALS TO CRITICAL ACCESS HOSPITALS- Section 1820(c)(2) (42 U.S.C. 1395i-4(c)(2)) is amended--

(1) in subparagraph (A), by striking `subparagraph (B)' and inserting `subparagraphs (B), (C), (D), and (E)'; and

(2) by adding at the end the following:

`(C) RECENTLY CLOSED FACILITIES- A State may designate a facility as a critical access hospital if the facility--

`(i) was a nonprofit or public hospital that ceased operations within the 3-year period ending on the date of enactment of the Health Care Preservation Act of 1999; and

`(ii) as of the effective date of such designation, meets the criteria for designation under subparagraph (B).

`(D) DOWNSIZED FACILITIES- A State may designate a health clinic or a health center (as defined by the State) as a critical access hospital if such clinic or center--

`(i) is licensed by the State as a health clinic or a health center if the State requires such licensure in order to operate as a health clinic or health center;

`(ii) was a nonprofit or public hospital that was downsized to a health clinic or health center; and

`(iii) as of the effective date of such designation, meets the criteria for designation under subparagraph (B).

`(E) FEDERALLY-QUALIFIED HEALTH CENTER- A State may designate a Federally-qualified health center (as defined in section 1905(l)(2)(B)) as a critical access hospital if such center--

`(i) operates a laboratory that has in effect a certificate issued under section 353 of the Public Health Service Act that permits such laboratory to perform tests categorized as high complexity;

`(ii) operates a radiology department; and

`(iii) as of the effective date of such designation, meets the criteria for designation under subparagraph (B).'.

(b) REVISION OF CRITERIA FOR DESIGNATION AS A CRITICAL ACCESS HOSPITAL- Section 1820(c)(2)(B)(iii) (42 U.S.C. 1395i-4(c)(2)(B)(iii)) is amended by striking `not to exceed 96 hours' and all that follows to the semicolon and inserting `not to exceed, on average, 96 hours per patient'.

(c) EFFECTIVE DATE- The amendments made by this section take effect on the date of enactment of this Act.

SEC. 202. AUTHORITY TO ESTABLISH A PROSPECTIVE PAYMENT SYSTEM FOR RHC SERVICES.

(a) ESTABLISHMENT OF SYSTEM- Section 1833 (42 U.S.C. 1395l) is amended by adding at the end the following:

`(u) AUTHORITY TO ESTABLISH PROSPECTIVE PAYMENT SYSTEM FOR RURAL HEALTH CLINIC SERVICES-

`(1) IN GENERAL- Notwithstanding subsections (a)(3) and (f), the Secretary may establish by regulation a prospective payment system for rural health clinic services (except for such services provided by a rural health clinic located in a rural hospital with less than 50 beds).

`(2) BUDGET NEUTRAL PAYMENTS- If the Secretary establishes a prospective payment system pursuant to paragraph (1), the Secretary shall establish the initial payment levels under such system in a manner that results in aggregate payments (including payments by individuals to whom services are provided) for the first year, as estimated by the Secretary, approximately equal to the aggregate payments that would have otherwise been made under this part.'.

(b) CONFORMING AMENDMENTS-

(1) PAYMENT- Section 1833(a)(3) (42 U.S.C. 1395l(a)(3)) is amended by inserting `subject to subsection (u),' before `in the case'.

(2) LIMITS- Section 1833(f) (42 U.S.C. 1395l(f)) is amended by striking `In establishing' and inserting `Subject to subsection (u), in establishing'.

(3) REQUIREMENT FOR RURAL HEALTH CLINICS- Clause (ii) of the second sentence of section 1861(aa)(2) (42 U.S.C. 1395x(aa)(2)) is amended by inserting `(and section 1833(u) if the Secretary implements a prospective payment system under that section)' after `section 1833'.

SEC. 203. REQUIREMENT TO CONSIDER RURAL ISSUES IN ESTABLISHING FEE SCHEDULE FOR AMBULANCE SERVICES.

(a) IN GENERAL- Section 1834(l)(2)(C) (42 U.S.C. 1395m(l)(2)(C)) is amended by inserting `, including differences in rural and non-rural areas' after `differences'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) takes effect as if included in the enactment of the Balanced Budget Act of 1997 (Public Law 105-33; 111 Stat. 251).

SEC. 204. STOP-LOSS PROTECTION FOR RURAL HOSPITAL OPD SERVICES.

(a) IN GENERAL- Section 1833(t)(10)(D)(i) (42 U.S.C. 1395l(t)(10)(D)(i)) (as added by section 402) is amended by adding at the end the following:

`The applicable percentage shall be 100 percent with respect to covered OPD services furnished during a transition year in a rural hospital.'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) take effect as if included in the amendments made by section 4523 of the Balanced Budget Act of 1997 (Public Law 105-33; 111 Stat. 445).

TITLE III--SAFETY NET PROVIDERS

SEC. 301. NEW PROSPECTIVE PAYMENT SYSTEM FOR FEDERALLY-QUALIFIED HEALTH CENTERS AND RURAL HEALTH CLINICS UNDER THE MEDICAID PROGRAM.

(a) IN GENERAL- Section 1902(a)(13) (42 U.S.C. 1396a(a)(13)) is amended--

(1) in subparagraph (A), by adding `and' at the end;

(2) in subparagraph (B), by striking `and' at the end; and

(3) by striking subparagraph (C).

(b) NEW PROSPECTIVE PAYMENT SYSTEM- Section 1902 (42 U.S.C. 1396a) is amended by adding at the end the following:

`(aa) PAYMENT FOR SERVICES PROVIDED BY FEDERALLY-QUALIFIED HEALTH CENTERS AND RURAL HEALTH CLINICS-

`(1) IN GENERAL- Beginning with fiscal year 2000 and each succeeding fiscal year, the State plan shall provide for payment for services described in section 1905(a)(2)(C) furnished by a Federally-qualified health center and services described in section 1905(a)(2)(B) furnished by a rural health clinic in accordance with the provisions of this subsection.

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